You Bought a Call Option with a Strike Price of $30

question 92

Multiple Choice

You bought a call option with a strike price of $30. What is your total payoff on this option contract if the underlying stock is selling for $31.50 on the option expiration date?

• A)$1.50
• B)$15.00
• C)$150.00
• D)$270.00
• E)$1,500.00

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Definitions:

Marginal Utility

Marginal utility refers to the extra satisfaction or benefit a consumer receives by consuming an additional unit of a good or service.

Total Utility

The complete gratification or advantage gained from using a specific quantity of a product or service.

Marginal Utility

The additional satisfaction or utility that a consumer receives from consuming one more unit of a good or service.

Utility-maximizing

Utility-maximizing refers to a principle in economics where individuals or businesses seek to achieve the highest level of satisfaction or profit from their decisions, given their resources and constraints.